Japan's economy bounces back with 1.9% growth in April-June quarter
10 Aug 2018
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Japan's economy expanded 1.9 per cent in the April-June quarter, bouncing back from a contraction in the previous quarter, helped by improved household spending despite global trade tensions and risks to the export and investment outlook.
Private consumption, which accounts for about 60 per cent of Japan’s GDP, was the biggest contributor to growth in April-June, rising 0.7 per cent.
Japan's economy rebounded in the second quarter, returning to growth despite growing global trade tensions.
Japan's economy, the world’s third-largest, contracted 0.9 per cent in the first quarter of 2018, for the first time in two years.
While consumer spending increased between April and June, external demand - exports minus imports - weighed on growth, data showed.
"While real GDP growth in Q2 was both strong and higher than the consensus forecast, we believe it is reasonable to conclude that growth momentum for the Japanese economy as a whole is gradually starting to slow," Nomura said in a research note.
The figures came as Japan's minister for economic revitalisation Toshimitsu Motegi met US Trade Representative Robert Lighthizer in Washington, amid rising global trade tensions with the US.
The economy is expected to continue growing due to consumer spending and business investment, but there is growing unease about the pace of future growth, economists say, with the rift between Japan and the United States presenting potential headwinds for growth.
Following a meeting with US Trade Representative Robert Lighthizer on Thursday, Japanese economy minister Toshimitsu Motegi appeared to maintain Tokyo's position that it preferred multilateral free-trade agreements over bilateral ones, which has been a point of contention with Washington.
Compared with the previous quarter, gross domestic product rose 0.5 percent, more than the median estimate for a 0.3 percent increase and after a 0.2 percent contraction in January-March.
Private consumption, which accounts for about 60 per cent of GDP, was the biggest contributor to growth in April-June, rising 0.7 per cent. That was more that the median estimate for a 0.2 per cent increase and marked a rebound from a revised 0.2 per cent fall in the first quarter.
Capital spending, the second-biggest contributor to growth, rose 1.3 per cent, the biggest increase since October-December 2016. That was above the median estimate for a 0.6 per cent increase.
However, external demand — or exports minus imports — subtracted 0.1 percentage point from growth, missing expectations for a 0.1 percentage point contribution.
The United States has pressured Japan for a bi-lateral free-trade agreement as a way to lower the US trade deficit.
US President Donald Trump is trying to re-negotiate the US trade relationship with other countries to curb practices which he says are unfair to US companies and workers.
